Cable companies open new front in “Rockstar” patent war

New lawsuit claims company hides patents, demands massive fees.

The Rockstar Consortium was formed in 2011 by Apple, Microsoft, Blackberry, Ericsson, and Sony to buy $4.5 billion worth of patents from Nortel, a large Canadian telecom company that had gone bankrupt two years earlier.

A bomb was dropped on the patent world last October when those patents were used to sue Google and other Android handset makers. In December, the Rockstar Consortium moved on to the cable industry, when its subsidiary Constellation Technologies LLC sued Time Warner (PDF), saying that its offering of high-speed data services infringes several Rockstar-owned patents.

The organization was clearly planning to sue more cable companies that offer Internet service, and now several of those companies have pushed back. Charter Communications and several smaller cable companies have sued Rockstar (PDF) in Delaware federal court, saying the patent-holding company has violated agreements made by Nortel to charge only "Fair, Reasonable, and Non-Discriminatory" (FRAND) rates for its patents.

In pre-lawsuit negotiations, Rockstar threatened the cable companies with its large patent portfolio but refused to give a list of the patents that it might use in litigation.

While Rockstar’s letters did accuse Plaintiffs of infringing specific patents within its portfolio, Rockstar was quick to explain that those named patents were provided by way of example, and that each Plaintiff should “keep in mind that the [named] patents are part of a much larger portfolio.”

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In addition to demanding exorbitant licensing fees, Rockstar also used the sheer size of its portfolio to preclude accused infringers from substantively evaluating the merits of Rockstar’s infringement allegations.

The lawsuit alleges that blowing off the commitments for free or low-cost licensing that Nortel made is a breach of contract. It also alleges that the "exorbitant" damage demands, hiding of patents, and handing off patents to subsidiary companies amounts to civil conspiracy. In part, Rockstar's motivation for working with other patent enforcement companies—like publicly traded Spherix, which bought more than 100 patents earlier this month—is to dodge its FRAND commitments, the Charter lawsuit alleges.